Senate Majority Leader Bill Frist (R-TN) will call on President Bush today to give Congress a list of offsets to potentially make up for spending related to Hurricane Katrina. This request is partially based on the fact that Katrina spending has conservatives in both chambers of Congress worried about how this recovery spending will affect the nation's deficits.

Frist will also apparently call on the President to do a formal Budget Act "rescission request" that would temporarily -- and possibly permanently -- suspend some federal spending to help pay for Katrina relief. According to an aide, Frist did not provide details on possible dollar figures, either for the offsets or the rescission request. Under the Budget Act provision (which is also known as impoundment authority) the White House can temporarily suspend federal spending for up to 45 days of "continuous session," typically 60 days from the date of the request. Suspending regular spending to deal with the cost of Katrina is neither responsible nor is it necessary. Yes, Katrina spending will add to our deficit, but the deficit can be brought down by a combination of responsible spending cuts and phasing out (or repealing) certain tax cuts. Frist's "responsible" call for a suspension on spending leads one to wonder where he and other prominent GOP leaders were when Bush passed trillions of dollars worth of tax cuts in 2001 and 2003.

Fiscal year 2005 ends this Friday, Sept. 30, and House and Senate Republican leaders have not been able to pass all spending bills for FY 2006 on the floor. Thus, we can expect them to pass a stop-gap funding bill to cover federal government spending by the end of the week.

According to an aide, GOP leaders in both chambers will push through a CR to fund government programs through Nov. 18. While some believe this extension will give appropriators sufficient time to wrap up their work on the outstanding FY 2006 appropriations bills, others think GOP leaders will not make their ambitious goal to pass all of the bills as separate measures this year. While the House has passed all eleven of its spending bills, the Senate has only passed eight of twelve, and only two of those have been given final approval and sent to Bush for his signature.

Amid misguided and mostly rhetorical proposals for cutting other areas of the budget to pay for Katrina relief (while continuing to cut taxes further), there is a strong and growing number of media outlets, political leaders, policy experts, and regular citizens who are demanding fiscal sanity return to the nation's capital.

USA Today, the paper with the country's largest circulation, joined the ranks of those calling for a reassessment of the president's tax cuts. The paper specifically called out those lawmakers whose support of reckless tax and budget policies have caused many of the fiscal problems we have today. The paper editorialized:

The current hypocrisy is that lawmakers who participated in the spending, borrowing and tax-cutting binge that put the nation in hock are now clamoring for spending cuts to offset storm costs...Their case would also be stronger if they would be willing to revisit recent tax cuts. The first law of holes is: When you're in one, stop digging. It would be the height of irresponsibility, for instance, to cut estate taxes when natural disasters, the Iraq war and surging health care costs are exploding the deficit.

Last Friday, General Accountability Office Comptroller David Walker strongly urged a "strategic, long range, and integrated" examination of tax expenditures to test their relevance and priority during a time when the federal budget is experiencing increasing strains. His comments came during the unveiling of a new GAO report recommending that the OMB and the Treasury take steps to ensure greater transparency of, and accountability for, tax expenditures.

Walker emphasized to reporters, as he has in the past, the importance of putting the nation on a more "prudent and sustainable course for the long term." He insisted that doling out tax preferences has an impact on the government's bottom line, and at a time when we are experiencing high deficits, it is important to reevaluate some of those expenditures.

In an op-ed in today's Washington Post, E.J. Dionne, Jr. notes that although Republicans claim to be fiscally conservative, "our federal purse strings are in the hands of fiscal radicals." Spending in the aftermath of Hurricane Katrina does have lawmakers on both sides of the aisle worried about potentially massive deficits. Some have been claiming a desire to take a fiscally responsible approach to spending, however cutting budgets while ignoring the costs of tax cuts is, in the long-run, not fiscally responsible at all.

As was posted yesterday in the blog, members of the House Republican Study Committee proposed drastic funding cuts in order to offset Katrina spending; cuts that would -- as Dionne said -- take "$80 billion from Medicare and $50 billion from Medicaid over five years and suggest reductions in school lunches, rent subsidies for the poor and foreign aid, among other things." He goes on to point out, however, that the amount of money the 2001 and 2003 tax cuts is costing our country this year alone amounts to $225 billion -- which could more than cover the expected costs of dealing with Katrina.

It doesn't, however, look like the Republican leadership is interested in pursuing this route to offset the costs of Katrina. Yesterday Bush pledged to join in on efforts to identify cuts elsewhere in the federal budget that can offset the expenditures for disaster aid, saying "I'm going to work with Congress to prioritize what may need to be cut." Cutting programs is the opposite of what needs to be done. In fact, many are arguing that a perpetual underinvestment in the infrastructure of our country is what allowed this disaster to spiral so radically out of hand in the first place.

Many Republican leaders in the House and Senate are worried about the costs of rebuilding after Katrina, even though President Bush has promised, and rightly so, to devote all the funds needed to help the devastated region. Republicans who are worried about excessive deficit-financed spending are pushing for the costs will be offset (most are suggesting by cutting the budget elsewhere). To appease them, OMB Director Josh Bolten said Tuesday that the administration would consider offsets, but did not offer any details about what would be cut and by how much. As Stan Collender correctly points out (subscription required), any offsets proposed by the administration would to little, if anything, to reduce the amount Katrina relief spending will add to the deficit, and the national debt. Because President Bush refuses to even consider not extending or rolling back some of his first term tax cuts, it will be future generations who will be paying for reconstructing the Gulf Coast.

The federal government is required by law to pay at least 75 percent of the cost of rebuilding public infrastructure after a disaster (1988 Stafford Act). To comply, Congress -- besides approving about $64 billion in emergency spending -- has agreed on a tax-relief bill to expand deductions this year for victims. The final bill was scored by the Joint Committee on Taxation as costing $6.1 billion over 10 years. Congress hopes these targeted tax cuts will spur employment of low-income workers on the Gulf Coast.

In addition, President Bush signed three bills today to help in the aftermath of the disaster. The bills waive Pell Grant and other federal student loan requirements for displaced college students and expand Temporary Assistance to Needy Families eligibility for victims.

Last week, twenty-one Republican members of the House sent a letter to President Bush, in which they urged him to cut non-defense discretionary spending to offset additional spending dealing with the hurricane aftermath. The letter said, "Congress and the President have a historic opportunity to show the American people that we are not afraid to make hard choices on cutting current federal spending when a national disaster requires investment of tens, possibly hundreds, of billions of dollars."

Cutting spending elsewhere in the budget, most likely for supports and programs benefiting low-income Americans is certainly not a hard choice for Congress as they continue to push the completion of reconciliation bills cutting entitlement spending simply to offset the cost of new tax cuts or the rich. Perhaps Congress and President Bush should be sincere in their claims to be able to make hard choices and call upon those Americans who can best afford to pay to shoulder just a tiny bit more of the burden through choosing not to pass new tax cuts for the wealthy this year. Cutting non-defense discretionary programs to pay for emergency hurricane relief funding is akin to robbing Peter to pay Paul and continues to concentrate the burden on low- and middle-income Americans.

Also, Reps. Hensarling and Flake, members of the conservative Republican Study Committee, sent a letter to Speaker Dennis Hastert and Majority Leader Tom DeLay, in which they suggested that the 2006 implementation of the Medicare prescription drug benefit be delayed in order to contain costs, which are expected to sky-rocket with all of the post-Katrina spending. In reality, though, these costs should be dealt with by promoting an agenda based on shared sacrifice -- not on cutting money further from the budget so that people don't have access to the services they rely upon. It's time the President to call for a renewal of shared sacrifice in rebuilding the Gulf Coast through our tax code.

Senator George Voinovich (R-OH) joined his voice with other Republicans who are seeking to re-evaluate plans to pass additional new tax cuts after Hurricane Katrina. Voinovich told reporters at a press conference this afternoon he believed the government needed more money to pay all of its priorities and obligations and because of that hoped "we won't hear any more about making tax cuts permanent."

While Voinovich did not call for specific tax increases, his decision to speak out against the accepted and irrational GOP policy of "starving the beast" through tax cuts at any time shows great vision and leadership. Let's hope other in Congress, Democrats and Republicans, follow his lead.

Congressional GOP leaders and the administration have, since Katrina hit, made a point of singling out charitable organizations and nonprofits for the important role they play in helping people in need. President Bush, in his address to the nation Sept.15, said, "I ask the American people to continue donating to the Salvation Army, the Red Cross, other good charities and religious congregations in the region." Bush, and other Congressional leaders, however, are undermining the abilities of the charitable sector to effectively provide help by continuing to push forward with budget cuts that harm nonprofits, as well as push for repeal of the estate tax, which would have adverse effects on nonprofits and the charitable sector as well.

In The Nonprofit Sector and the Federal Budget: Fiscal Year 2006 and Beyond, they found that the budget proposed by Congress would cut funding for programs of interest to nonprofit groups by $40 billion between FY '05 and FY '10. The President's budget proposal is even more harmful; it would cut these same programs by $71.5 billion over the time period.

In his remarks to the nation Sept. 15, President Bush said the federal government would be responsible for "the great majority" of the costs of repairing public infrastructure in the Gulf Coast. Government spending in the aftermath of the disaster could reach proportions not seen since the country was hit by the Great Depression, and many are predicting spending could top $200 billion.

Economic analysts are predicting the deficit for FY 2006 could easily out-do the record deficit of $412 billion reached last year. Deficit spending is not always necessarily harmful; in fact if done correctly it can serve to revitilize regions of the country all while spreading the cost over a number of years. However, the problem with extreme deficit-financed spending right now is that the government will be borrowing all while continuing to uphold -- and push for more -- tax cuts for the rich. As this New York Times editorial points out, "The problem is that the United States was deep in hock before Katrina." The fact that tax cuts are on the agenda as well as massive spending is "breaking the bank for our descendants, while impairing our ability to borrow responsibly today."

If the government plans on taking a fiscally responsible approach while spending "unprecedented amounts" in the aftermath of Katrina, they will need to cease pursuing tax cuts for the wealthy by allowing the dividends and capital gains cuts to expire in 2008 (instead of extending them), and they will also need to suspend some tax breaks scheduled to go into effect in 2006 (for more on this, see this CBPP report). The priorities of the administration and Congress need to change, or else current and future tax payers can expect to be hit with a large bill -- a bill either in the form of higher taxes and/or severe cuts in government programs.



Posted by Becky Lewis, 12:11:20 PM

Friday, September 16, 2005

Thursday, September 15, 2005

Wednesday, September 14, 2005

Tuesday, September 13, 2005

Monday, September 12, 2005